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PAY EQUITY EMPIRICAL INQUIRIES Robert T. Michael, Heidi I. Hartmann, and Brigid O'Farrell, Editors Pane} on Pay Equity Research Committee on Women's Employment and Related Social Issues Commission on Behavioral and Social Sciences en c] Education National Research Council NATIONAL ACADEMY PRESS Washington, D.C. 1989

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NATIONAL ACADEMY PRESS 2101 Constitution Avenue, NW Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engi- neering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel O. Thier is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council. This project has been supported by funding from the Ford Foundation and the Rockefeller Foundation. Library of Congress Cataloging-in-Publication Data Pay equity: empirical inquiries/Robert Michael, Heidi Hartmann, and Brigid O'Farrell, editors; Panel on Pay Equity Research, Committee on Women's Employment and Related Social Issues, Commission on Behavioral and Social Sciences and Education, National Research Council. P. cm. Selected papers of a workshop held in Sept. 1987. Bibliography: p. Includes index. ISBN 0-309-03981-9: $37.95.ISBN 0-309-03978-9 (pbk.): $27.95 1. Pay equityCongresses. I. Michael, Robert T. II. Hartmann, Heidi I. III. O'Farrell, Brigid. IV. National Research Council (U.S.). Committee on Women's Employment and Related Social Issues. Panel on Pay Equity Research. HD6061. P35 1989 331.2'1dc19 Copyright (I) 1989 by the National Academy of Sciences. Printed in the United States of America 89-20726 CIP

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Panel on Pay Equity Research ROBERT T. MICHAEL (Chair), Department of Education and National Opinion Research Center, University of Chicago FRANCINE D. BLAU, Institute of Labor and Industrial Relations, University of Illinois ARTHUR S. GOLDBERGER, Department of Economics, University of Wisconsin JULIE A. SACKETT, Personnel Department, Motorola, Inc., Scottsdale, Ariz. KAY L. SCHLOZMAN, Department of Political Science, Boston College CATHY A. SCHOEN, Service Employees International Union, AFL-CIO, Washington, D.C. DONALD P. SCHWAB, Graduate School of Business, University of Wisconsin LINDA I. WAITE, Rand Corporation, Santa Monica, Calif. BRIGID O'FARRELL, Study Director LUCILE A. DIGIROLAMO, Staff Associate HEIDI I. HARTMANN, Consultant Committee on Women's Employment and Related Social Issues ALICE S. ILCHMAN (Chair), President, Sarah Lawrence College HELEN S. ASTIN, Graduate School of Education, University of California, Los Angeles MAXINE BACA-ZINN, Department of Sociology, University of Michigan WILLIAM H. CHAFE, Department of History, Duke University ESTHER M. CONWELL, Xerox Webster Research Center, Webster, N.Y. CYNTHIA FUCHS EPSTEIN, Russell Sage Foundation and City University of New York GENE E. KOFKE, AT&T (Retired) ROBERT E. KRAUT, Bell Communications Research, Morristown, N..~. ELEANOR HOLMES NORTON, Georgetown University Law Center DIANNE PINDERHUGHES, Department of Political Science, University of Illinois NAOMI R. QUINN, Department of Anthropology, Duke University EUGENE SMOLENSKY, Graduate School of Public Policy, University of California, Berkeley ROBERT M. SOLOW, Department of Economics, Massachusetts Institute of Technology ROBERT K. YIN, COS M OS Corporation, Washington, D.C. BRIGID O'FARRELL, Study Director LUCILE A. DIGIROLAMO, Staff Associate

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Contents PREFACE ....... ACKNOWLE DGM E NTS WORKSHOP PARTICIPANTS PAY EQUITY: ASSESSING THE ISSUES Robert T. Michael and Heidi I. Hartmann PART 1. GENDER DIFFERENCES IN WAGES: WAGE DETERMINATION FOR INDIVIDUALS SALARIES, SALARY GROWTH, AND PROMOTIONS OF MEN AND WOMEN IN A LARGE, PRIVATE FIRM ... Barry A. Gerhart an ~ George T. Milkovich COM MENTARY .... Christopher Winship 2 MEASURING THE EFFECT OF OCCUPATIONAL SEX AND RACE COMPOSITION ON EARNINGS .............................................. Elaine Sorensen 3 EFFECTS OF EXCESS SUPPLY ON THE WAGE RATES OF YOUNG WOMEN Alice Nakamura an ~ Masao Nakamura 4 THE EFFECTS OF SEX-ROLE-RELATED FACTORS ON OCCUPATIONAL CHOICE AND SALARY .................................................. Linda M. Subich, Gerald V. Barrett, Dennis Doverspike, an Ralph A. Alexander v X1 . . . ................ X111 1 23 ............... 44 49 .... 70 .... 91

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CONTENTS PART II. JOBS AND OCCUPATIONS AS THE UNIT OF ANALYSIS 5 PAY THE MAN: EFFECTS OF DEMOGRAPHIC COMPOSITION ON PRESCRIBED WAGE RATES IN THE CALIFORNIA CIVIL SERVICE fames N. Baron and Andrew E. Newman COMMENTARY ............ Jean Ross 6 COMPARABLE WORTH, OCCUPATIONAL LABOR MARKETS, AND OCCUPATIONAL EARNINGS: RESULTS FROM THE 1980 CENSUS Toby L. Parcel 7 OCCUPATIONAL SEGREGATION, COMPENSATING DIFFERENTIALS, AND COMPARABLE WORTH Randall K. Filer COMMENTARY ................. ;/ames P. Smith PART III. COMPARABLE WORTH IMPLEMENTATION COMPARABLE WORTH AND THE STRUCTURE OF EARNINGS: THE IOWA CASE .......................................... Peter F. Orazem an ~ I. Peter Mattila ... 107 .............. 131 ....... 134 153 171 .................... 179 9 THE IMPACT OF PAY EQUITY ON PUBLIC EMPLOYEES: STATE OF MINNESOTA EMPLOYEES ATTITUDES TOWARD WAGE POLICY INNOVATION ....................... Sara M. Evans an ~ Barbara ;/. Nelson ................................ 200 10 WOMEN S PAY IN AUSTRALIA, GREAT BRITAIN, AND THE UNITED STATES: THE ROLE OF LAWS, REGULATIONS, AND HUMAN CAPITAL ....................................... .................... 222 Robert G. Gregory, Roslyn Anstie, Anne Daly, an ~ Vivian Ho COM MENTARY .................................................................... Ronald G. Ehrenberg BIOGRAPHICAL SKETCHES OF CONTRIBUTORS INDEX .......... 243 .................................... 247 251

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Preface There has been considerable effort and much progress in recent years in economic analyses of wage determination and in so- ciological studies of the marketplace and occupational structure. Despite the im- proved understanding that flows from this process, however, there exist sizable and systematic wage differences between wom- en and men that cannot be explained by measured differences in skill, experience, effort, job commitment, or most any other attribute of workers that has been stucTied. Some argue that the unexplained differences constitute a serious inequity that should be addressed by public and private policy. As a prescription for relieving the ineq- uity, "comparable worth" or "pay equity" has been proposed a controversial strategy for using some objective criterion for setting wages in a way that eliminates gender as a possible determinant of wages. Substantial public activity and applied research have been undertaken related to comparable worth. To stimulate research on wage de- termination processes and their relationship to the implementation and consequences of comparable worth strategies, the Commit- tee on Women's Employment and Related . . vet Social Issues established the Panel on Pay Equity Research in 1985. The establishment of the panel was an outgrowth of several previous National Re- search Council activities that addressed the issue of wage clifferentials between men and women. In 1981, in a National Research Council report, Women, Work, anc! Wages: Equal Pay for Jobs of Equal Value, the Committee on Occupational Classification and Analysis reported that relatively little research hac] been done on methods of comparing jobs since job evaluation systems were first developed in the 1930s and 1940s. That report contended that determining whether an(l how much discrimination af- fects wage rates is difficult and required further research. Two years after publication of Women, Work, anct Wages, the National Research CounciT's Committee on Women's Em- ployment and Relate(l Social Issues held a seminar on comparable worth research, which gathered a diverse group of scholars to develop an agenda of neecled research. The committee concluded that the largest gap in the base of knowle(lge was not a gap in theory nor a gap in policy measures, but

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~ ~ vill rather a gap in the facts about how the labor market functions, how wages are set, how firms operate in structuring their remu- neration schemes, how decisions about pro- motions and new hiring are made, and for the several instances in which comparable worth legislation has been implemented, how comparable worth worked, and how it was accepted. The Panel on Pay Equity Research was established with a twofold purpose: (1) to stimulate and support empirical research that examines wage differentials and wage setting practices and that assesses the eco- nomic, social, and organizational conse- quences of comparable worth relative to alternative equal employment opportunity strategies and (2) to inform and advance the policy debate by disseminating the results of this research. The panel was supported in its work by the Ford Foundation and the Rockefeller Foundation. Its members were selected to represent a range of clisciplines in the be- havioral and social sciences, strong expertise in research methodology, and knowledge of management and labor issues. An effort was also macle to identify individuals who held differing perspectives on pay equity issues and who also had a strong interest in en- couraging high-quality research on the topic. In early 1986, the pane} announced the availability of $150,000 in research funds, to be distributed through small research grants of approximately $15,000 each. The solicitation for proposals was widely dis- tributed to the research community. In re- sponse, the pane} received over 220 pro- posals for empirical studies on various aspects of the comparable worth debate. After re- view by the pane} members and a group of outside experts, the pane} selected eleven studies for funding. In February 1987 the selected researchers met with the panel to discuss their research while in its initial stages. Results of the completed research projects were presented to the pane! and PREFACE other experts at a workshop in September 1987. The papers presented in this volume are the final results of a number of the studies. This volume presents new and, in some instances, contradictory findings on male and female wage differences and the com- parable worth solution. In the introductory essay, Heidi Hartmann and I provide the context for this volume by summarizing the major conclusions of the research, high- lighting the areas of consensus and cTisa- greement among the studies, and discussing issues that are not addressed ant] need to be addressed anal, therefore, provide prom- ising directions for further research. The papers themselves span the various topics of research the panel wanted to encourage. The relationships of gender, job classi- fication, ant] the wage determination pro- cess are analyzed at the individual level by Gerhart ancI Milkovich, Sorensen, Naka- mura and Nakamura, and Subich, Barrett, Doverspike, and Alexander. Race- and gen- der-based wage differences by occupation are addressed by Baron and Newman, Par- cel, and Filer. The effects of the imple- mentation of comparable worth plans in the private and public sectors are measured at the state level by Orazem and Mattila for Iowa and by Evans and Nelson for ~\Iin- nesota. Gregory, Anstie, Daly, and Ho as- sess the effects on an international level for Australia, Great Britain, and the United States. Comments by the discussants who par- ticipated in the September 198` workshop provide yet another perspective on the facts, their interpretation, and their policy im- plications. Ronald Ehrenberg, J can Ross, James Smith, and Christopher Winship, among others, enhanced the discussions of the panel an(l the work of the researchers through very practical suggestions and ques- tions regarding data, methods, and findings, as well as by raising the overarching sub- stantive issues on which there is agreement and those on which the debate continues.

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PREFACE The purpose of this panel was not to draw conclusions ant] make recommendations for policy. Rather, the goal of the Panel on Pay Equity Research was to stimulate research and to encourage new researchers to study difficult empirical questions underlying the current debates on the complex issues sur- rounding comparable worth. The activities of our panel over the past two years have been to that end. The discussions with pane} members, researchers, and discussants in meetings ant] workshops were informative, thoughtful, and lively. We present the in- troductory essay and selected research pa- pers, with their diEering points of view, in the hope that they will stimulate further discussion and research and thus accomplish our objective. RosE~T T. MICHAEL, Chair Panel on Pay Equity Research

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Acknowledgments A volume such as this reflects the time and effort of a great many people, and it is my pleasure to thank those I have hacT the opportunity to work with on this endeavor. The Pane} on Pay Equity Research consists of academic scholars from different disci- plines and leaders from business and labor, all with expertise in research methods. Pan- el members often held differing views and voiced differences of opinion, but our meet- ings were uniformly congenial and construc- tive in the process of selecting studies, monitoring grantees, and reviewing written products. I wish to express my personal thanks to each member of the pane! for the effort and enthusiasm that have yielded a fine product. The fifteen researchers who received grants expended a great deal of time and effort in carrying out the work they proposed far in excess, I suspect, of the time budgeter! in their proposals. We greatly appreciate their substantive contributions, their re- sponsiveness to suggestions and criticisms, and their attention to cleadlines and details. We would also like to thank the discussants at our September 1987 workshop, as well as the many experts who assisted us in the review and evaluation of the 220 initial proposals we received. I would like to express my appreciation to the pane! s staff. The original study di- rector and my co-editor, Heidi Hartmann, had major responsibility for the initial for- mulation of the project and for coordinating the process of announcing, reviewing, se- lecting, and monitoring the grants. She made an invaluable contribution, both substan- tively and administratively, to the work of this panel and we sincerely thank her. We also thank Cynthia Costello, interim study director, who coordinates] the first workshop for the grantees, and Brigid O Farrell, the current study director, who saw us through the grantees second workshop and the final review and editing of this volume. She also organized the conference to disseminate the research findings to the wider research, policy, business, and labor communities. We also thank Lucite DiGirolamo, staff associate, who ably organized and carried out the many and varied processes involved in a project of this type. Suzanne Donovan, consultant to the panel, provided excellent technical expertise to the panel during the proposal review and selection process, and

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xii to the selected researchers during the first workshop. We would also like to express our appreciation to Victoria Threlfall, who assisted the pane} staff in announcing the availability of research funds; Karan ForcI, who assisted with the organization of the September 1987 workshop; and Margaret Drewes, Alison Foley, and fill Coogan for their work on the final manuscript. We thank the Committee on Women's Employment and Related Social Issues for their support of the work of this panel. Jean Shirhall, editor for the Press, worked with authors, staff, and the Press to make this production possible. David Goslin, former executive director, Brett Hammond, acting executive director, Robert Caplan, current executive director, and Eugenia Grohman, ROBERT T. Michael, Chair director for reports, Commission on Be- Pane! on Pay Equity Research ACKNOWLEDGMENTS havioral and Social Sciences and Education, all have our appreciation for their continued support of the work of the committee and its panel. Several organizations made the work of our pane} ant] this volume possible through their financial support. We sincerely thank both the organizations and their represen- tatives, in particular, Phoebe Cottingham, program officer at the Rockefeller Foun- clation, and tune Zeitlin, program officer at the Ford Foundation. We wouIcl also like to express our appreciation to Amy Vance, who while at the Ford Foundation was most supportive of this project during its initial stages.

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Workshop Participants September 14-15, 1987 PANEL MEMBERS ROBERT T. MICHAEL (Chair), Department of Education and National Opinion Research Center, University of Chicago FRANCINE D. BLAU, Institute of Labor and Industrial Relations, University of Illinois ARTHUR S. GOLDBERGER, Department of Economics, University of Wisconsin KAY L. SCHLOZMAN, Department of Political Science, Boston College CATHY A. SCHOEN, Service Employees International Union, AFL-CIO, Washington, D.C. DONALD P. SCHWAB, Graduate School of Business, University of Wisconsin LINDA I. WAITE, Rand Corporation, Santa Monica, Calif. RESEARCHERS JAMES N. BARON, Graduate School of Business, Stanford University BARBARA A. BENO, Department of Sociology, Hofstra University RANDALL K. FILER, Department of Economics, Hunter College, City University of New York BARRY A. GERHART, New York State School of Industrial and Labor Relations, Cornell University ROBERT G. GREGORY, Department of Economics, Australian National University, Canberra ALICE NAKAMURA, Faculty of Business, University of Alberta, Edmonton BARBARA I. NELSON, The Hubert H. Humphrey Institute of Public Affairs, University of Minnesota PETER F. ORAZEM, Department of Economics, Iowa State University . . . x~ TOBY L. PARCEL, Department of Sociology, The Ohio State University ELAINE SORENSEN, University of Massachassetts, Amherst, ant] The Urban Institute, Washington, D.C. LINDA M. SUBICH, Department of Psychology, The University of Akron DISCUSSANTS RONALD G. EHRENBERG, New York State School of Industrial and Labor Relations, Cornell University PENNI HUDIS, Hoffman Research Associates, San Francisco, California JULIANNE MALVEAUX, University of California, Berkeley JEAN ROSS, National Committee on Pay Equity, Washington, D.C. JAMES P. SMITH, Rand Corporation, Santa Monica, Calif. CHRISTOPHER WINSHIP, Department of Sociology, Northwestern University STAFF HEIDI I. HARTMANN, Director, Institute for Women's Policy Research, Washington, D.C. BRIGID O'FARRELL, Study Director, Pane! on Pay Equity Research, National Research Council GUESTS HARRIET HARPER, Women s Bureau, U. S. Department of Labor JUNE ZEITLIN, Program Officer, Human Rights and Governance, The Ford Foundation

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